Google regularly receives requests from copyright owners and reporting organizations that represent them to remove search results that link to material that allegedly infringes copyrights. Each request names specific URLs to be removed, and we list the domain portions of URLs requested to be removed under specified domains.

That means that the transparency report only measures links in Google’s search engine. That doesn’t include Blogger which is a hot bed of links to sites using the BitTorrent protocol, and it also does not include YouTube.

YouTube, of course, is a site that is 100% within Google’s control and for which Google sells 100% of the advertising.

We’ve always wondered why the transparency report doesn’t include all take down notices that Google receives across all of its platforms, because that would be…you know…transparent.

Today we find out from a Google representative (the elusive and nameless Google representative who really gets around) that YouTube took down 180 MILLION infringing videos LAST YEAR ALONE according to PC World:

“We’ll continue working to protect people using our services,” Google’s lawyer said Monday. Last year alone, he said, it removed 500 million “bad ads” and over 180 million YouTube videos for policy violations.

Aside from the mindblowing number of takedowns, this admission raises a more interesting question. If any advertising was sold against the 180 million videos–and it would be hard to believe that NO advertising was sold–what happened to that money? Did any advertisers get a refund?

We don’t know if these resignations are related to the realization that Spotify actually is cannibalizing transactional revenues, or that YouTube Music Key will do more and worse, but the timing is suspect given recent statements by label chief Lucian Grange.

Spotify has been a disaster from bad artist relations to the catalyst for declining transactional revenues. We celebrate the move for more aggressive positioning to paid subscriptions, but even at current rates of $9.99 a month it’s hard to see subs gain the marketshare and revenue needed to compensate for the rapidly declining transactional revenues. In 2014 Itunes revenues dropped by double digits with Apple reporting a decrease of 13%-14% year to year. This following a decrease in overall digital revenues in 2013 (the first decrease ever in digital format sales since their inception).

So that’s two consecutive years of reduced revenue in what should be a growing market segment. So what went wrong? In a word, Spotify. Two more, YouTube.

Although the aggressive move to paid subscriptions is a very positive one, we’re still concerned when looking at the numbers in the tables above when put in the context of the current state of the mature subscription based businesses (see below).

Netflix only has 36m subscribers in the US, no free tier, and massive limitations on available titles of both catalog and new releases. Sirius XM, 26.3m in the US as a non-interactive curated service installed in homes, cars and accessible online. Premium Cable has 56m subscribers in the US paying much more than $10 a month and also with many limitations. Spotify… 3m paid subscribers in the US after four years. Tell us again about this strategy of “waiting for scale.” Three Million Paid… Three…

Of course none of this is to say that streaming can’t work. It can. It’s that Spotify (and YouTube) are just really bad music business models that have unsustainable economics and exploit artists because they are financial instruments and not a music companies.

Let’s be clear about this. We do believe that streaming is the future of music delivery and distribution, but thus far the transition has been horribly mismanaged. What is needed is clear leadership to define the models and value propositions that work for all stakeholders. We’ve made some suggestions in our common sense post “Streaming Is the Future, Spotify Is Not. Let’s talk Solutions.”

We’re open minded about new business models, but before people get ahead of themselves with wild claims about a $100 Billion Record Business based on magic unicorn math we need to get back to earth, and get out the calculators.

Wait, you STILL want to argue with us? Dudes. This is getting to be like the “Cheney was behind Sept 11th Attacks,” “the moon landing was faked” or “Obama has a fake birth certificate” arguments. You are starting to sound like the flat earth society.

It defies logic. In what universe did you think that offering folks access to songs for free (albeit ad supported) wasn’t gonna cut into sales and revenue? Basic behavioral economics dudes.

There is an honest argument about streaming out there. The argument is that streaming revenues (in certain cases) will more than make up for the lost sales. And I’ll give you that. With “windowing” and “transactional streaming” I bet there is emerging evidence that this sort of streaming has been good for movies and television. But the honest argument IS NOT “Streaming” increases sales as Billboard and the Country Music Association research department recently argued. That’s some flat-earth superstition. Have some self respect y’all.

Like this:

By the end of 2015 Pandora Executives and Investors will have sucked nearly 1/2 a billion dollars in “stock compensation” out of the company. Yet Pandora complains very publicly to the US Congress about being unable to cover royalties to performers and Songwriters. Hence the massive lobbying effort in Washington DC and endless lawsuits against performers and songwriters. Pandora is currently pleading for lower royalties before the Copyright Royalty Board in Washington DC.

2 years later this article in Billboard. Here Billboard reports with (almost) a straight face that Silverman is now predicting a much more pessimistic 5.5 billion dollar business by 2019. While the journalist does address the earlier $100 billion prediction you got to wonder why Billboard would devote this sort of fawning coverage to a guy that was off by 94.5 billion dollars! The only explanation is Tommy Silverman is truly a genius.

Like this:

We’ve got data. Lots of data. We have two different consumption surveys of college students and one of the broader population. We’ve also got the details of 2014 digital revenues from a moderately sized independent catalogue.

While everyone else wildly speculates we’re gonna show you our data. All this week.

Really? Let’s do the math on that and check. It’s just math. What are you so afraid of?
So let’s suppose that Drake sold ZERO albums after this week. In order for streaming income to catch up to sales this would require Drake to get 27 million streams for the next 34 weeks. But that is only if Drake doesn’t sell anymore albums. Taylor Swift has sold nearly 8 million albums. The first week she sold 1.3 million albums. Drake is gonna sell A LOT more albums. Let’s be completely pessimistic and assume he only sells an additional 500,000 this year. This would require Drake to be the TOP streamed artist on Spotify for 68 weeks. Or 1 year and 3 months. Unlikely.

“But wait there will be residual streams over the next few years, decades even”

Yes and there will be residual sales over the next few years and decades. At current rates streaming revenue will never catch up…

But I digress. Let’s look at todays little nugget of real data:

The percentage of college students in our survey that DO NOT buy digital music has risen from 26.5% in 2014 to 36.7% in 2015. This corresponds to reports of drops in sales of digital music elsewhere. Is this the result of the widespread adoption of streaming? We don’t know for sure…but 200 years of economics suggest that consumers don’t buy things they already get for free. It strains credulity to insist that streaming does not cannibalize sales. For this would require these 18-24 year olds to suddenly behave differently than all other consumers we have ever known.

It’s not that streaming can’t work. It can. It’s that Spotify is a bad business model that has unsustainable economics and exploits artists because it is a wall street financial instrument and not a music company.

The key to building streaming business models that make sense and are sustainable is to increase the subscription fees, utilize well thought-out windowing models and experiment with new pricing tiers for access based services.

Historically the music business has employed the use of special markets such record clubs (remember 11 CD’s for one penny). It’s not that record clubs…

Like this:

Spotify isn’t necessarily the enemy of performers and songwriters. No I don’t like the rates I am paid (as either performer or songwriter). My main beef with Spotify (and the deals labels cut) is that I wish I didn’t have to have all my catalog on the service. I’d simply like to be able to opt-out. And if I control enough of my rights I can. Spotify is a legally licensed service that negotiated deals with large blocks of rights holders. It may have been bad business for performers and songwriters but it was just that: A business. A legally operating business.

However I’m not sure you can same thing about Pandora. Pandora has conducted a scorched earth campaign against artists and songwriters. Refused to pay on pre 1972 recordings despite recent court rulings. Sued BMI and ASCAP for lower rates. In the ASCAP case there were tens of millions of dollars spent in legal fees to save a few million dollars a year? Pandora spent millions lobbying congress to pass a FEDERAL law that would have mandated artists take up to a 60% pay cut. Who does that? What kind of business goes to the US Congress to force it’s suppliers to take less? Also in what appears to be some sort of bizarre publicity stunt,they claimed to have bought a radio station in South Dakota (it’s still not clear they have all the assets that would allow them to really claim this). The idea here may have been that they would pay lower royalties as a terrestrial and web broadcaster? Each of these “events” was loudly proclaimed as “good news” for Pandora and it’s stock price in the financial press. Why? I don’t really know but maybe it has something to do with this:

Pandora does not seem like an actual “business” to me. You readers are smart enough to draw your own conclusions.

While I’m not a huge fan of Spotify they have negotiated and despite the hardball stance on free tier of streaming have generally played by the rules. Yes there may be a sort of Cold War between artists and Spotify, but there are rules.

So lets run with that analogy. If Spotify is like the old Soviet Union what do we make of the DeadEnders over at Pandora? Pandora has just about destroyed the music licensing system through their scorched earth policies. The Copyright Office came as close as they could to pointing the finger at Pandora in their recommendations for music licensing reform. One could argue that the last three years of Pandora rate court shenanigans is the very reason that the Copyright Office decided to study the music licensing process in the first place!

So if Pandora doesn’t care if they destroy the federal licensing process on which they and every TV, radio station, restaurant and venue in the country depends what are they? They are not a business.

Like this:

We’ve got data. Lots of data. We have two different consumption surveys of college students and one of the broader population. We’ve also got the details of 2014 digital revenues from a moderately sized independent catalogue.

While everyone else wildly speculates we’re gonna show you our data. All this week.

This is not pie in the sky projections involving “connected refrigerators” from the VPs of digital “strategy” at your record label or distributor. This is what is really happening. And can we really trust these digital executives anyway? They have been proven objectively and demonstrably wrong. We suspect they are now just making shit up to try to cover their asses, (or looking for jobs at the streaming services.)

The Cynical Musician has demonstrated a flat rate streaming model of the music business essentially creates a cap on the size of the recorded music business. The corollary to this is that as streaming services “scale” the rates will go down per spin. Our data shows that this is indeed the case. Streaming rates per spin are falling. This is contrary to what pro-streaming music business executives and the digital services have claimed. Details here.

Like this:

We’ve got data. Lots of data. We have two different consumption surveys of college students and one of the broader population. We’ve also got the details of 2014 digital revenues from a moderately sized independent catalogue.

We’re gonna show you our data all this week.

This is not pie in the sky projections from the VPs of “digital” at your record label or distributor. This is what is really happening. You know you can’t trust these digital executives, right? They are objectively and demonstrably wrong. We suspect they are now just making shit up to try to cover their asses (or looking for jobs at the streaming services.) Who will be the first executive to lose their job over the streaming fiasco?

Here’s todays installment:

According to our detailed examination of a moderately sized labels digital revenue, it appears that free Spotify pays less than a tenth of a penny per stream. $0.000966 to be exact. This is all revenue to rights holders! The paid service pays 7.5 times as much (But as we detailed yesterday a survey of college students shows revenue from paid subscriptions appears to be falling).

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